1 year - Y! Finance

NetEase ($NTES) cranked out Q1 earnings after the bell today that handily beat the Street by 13 cents. They outpaced our Estimize as well with their EPS of $1.14. This was a pleasant surprise as many of our other holdings having been stinking up the joint lately.

A big part of NetEase’s success last quarter was the strong growth of their in-house products. Having already re-upped their license with Activision ($ATVI) for World of Warcraft, it was good to see increasing demand for their own games.

Here’s the Q1 YoY breakdown:

• Revenue +39%
• Online gaming revs +31%
• Ad revs +13%
• Net income +28%
• Cash flow +34% to $212 mil.

Looking ahead, the CEO had these positive comments:

“In the second and third quarters of 2012, we plan to initiate beta testing of several highly anticipated games in our pipeline…With respect to our licensed games, we are pleased to have renewed our contract with Blizzard Entertainment to continue our existing cooperation on Blizzard Entertainment’s World of Warcraft in mainland China.”

Ranked 7th in the BeanScreen this month, NetEase’s fundamentals should remain strong after this report. We’ll have the new data crunched in a few days. Back on Jan. 9, we opened a position in NTES at $42.25. We may be adding soon if she drops back into the $56-58 range.

sources:  Chinese Online Gaming NetEase Rises On Q1 Earnings – Investors.com

NetEase Reports First Quarter 2012 Unaudited Financial Results – Yahoo! Finance

disclosure: we currently own shares in NTES

$RES claims the top spot in May as the fundies continue to impress…but no love from the market.

$HITK approaching our “add to” range after this week’s sell-off. Small generic druggy so be careful.

$EZPW hovering near 52 week lows, but we’re still riding the pawn shop bandwagon to glory.

$AAPL you give permission to have your location tracked? Do u care? Didn’t think so – AllThingsD

$TNH just barely eked out YoY gains on top and bottom lines for Q1. Market no like – Y! Finance

$CF sold off hard after reporting an excellent Q1, but can the good times last? – Bloomberg

$NTES held its own during last week’s broad sell-off. Earnings on tap 5/16 for the Chiner gamer.

$CEO looks like $COP is gonna pick up a big chunk of the tab on that spill in Bohai Bay – Forbes

$BRLI investing in some new medical research and technology to help the ladies – BusinessWire

$SYNT flying up the BeanScreen ranks after its recent blowout Q. Time to get long?

$INTC “where we are part of the device.” Sounds like cloud talk, but it’s inevitable – CNNMoney

$LULU not just just a trendy shop for yogis, it’s a clothing innovator (and odor conqueror) – IBD

$CHL with a billion people plugged into the matrix, the future looks bright – Forbes

$QCOR a quick look at recent quarterly income data. Hard not to like – Y! Finance

$GRMN cranked out a strong Q as revs were up across the board. $TRLG did well too – WSB

$MED reports Q1 this Wed 5/8.  Keep the Einhorn away!

$RGR absolutely killed estimates as sales shot up nearly 50% YoY in Q1 – Reuters

$BKE April sales bring May pain. Beat estimates but not by enough. Tough week – AP

$PCLN cracks the WSB20 for first time. Reports on 5/9 – here’s our Estimize.

$QCOM another newcomer to the WSB20. We celebrated by starting a position on Friday.

…and as always, you can check out this month’s 2nd Twenty right here.

disclosure:  we currently own shares in RES, HITK, EZPW, AAPL, NTES, CEO, INTC, CHL, GRMN, TRLG, MED, BKE and QCOM

Since last week I’ve been busy as hell moving to a new location for my day job. It’s been hectic and crazy (just like this quarter’s earnings). You never realize just how much crap you’ve accumulated over the years until you move. Thus, I haven’t been able to blog as much as I’d hoped about the recent Q’s of some of our holdings.

Two of our faves reported within the last 24 hours or so, Garmin ($GRMN) and True Religion ($TRLG). Garmin continued its string of EPS beats (3 in a row now I think), while True Religion bounced back after last quarter’s torching.

First True Religion:

The most surprising thing to me was the dividend announcement (20 cents per qtr). This may be a sign of cash flow maturity and/or an olive branch to long term investors. They also said they’re going to buy back up to $30 mil in stock over an undisclosed period of time.

For Q1 the denim diva reported EPS of 41c per share, 3 cents ahead of our Estimize. Revenues came in above consensus as well. Here’s the YoY lowdown:

• Net sales +14%
• Net income +16%
• U.S. Consumer Direct revs +23%
• U.S. Wholesale revs +2.8%
• International revs +3.6%
• Comps +13%

Positives across the board….good sign. Especially that Wholesale segment increase in sales. That’s the first time since Q4 2008 that they’ve done that. SG&A expenses were up as well though, increasing 13% YoY, but that’s cool because it was due in large part to opening 13 new stores in the U.S. and 10 abroad.

5 year (Y! Finance)

After being ranked in the WSB20 for more than 2 years, TRLG finally got the boot this month, slipping out to a still very respectable 23rd. We’ve owned them for more than two years now, buying and selling shares a couple times along the way, but have maintained a core position of about $19.50 per share. Our last purchase was in August 2010 at $18.37.

This was a good report. It was do or die time and they have obviously lived to see another quarter…and hopefully many more.

Now on to Garmin:

What can we say? These guys have managed to defy the odds and quell the naysayers over the last few years as they’ve reinvented themselves in some ways. Yes, the automobile GPS remains their bread and butter, but not nearly as much as it used to. Gadget sales for fitness and outdoor have really taken off, and they continue to crank out state-of-the-art aviation and marine equipment.

To kick off the year they earned 45c per share, 6 cents shy of our Estimize. A little disappointing as we were hoping they’d top last year’s 49c EPS. Nevertheless, they beat the Street and perhaps stole market share in Europe from rival TomTom, who turned in a dismal report last week.

Here’s the YoY numbers:

• Total revenue +10%
• Auto +6%
• Outdoor +16%
• Fitness +9%
• Aviation +5%
• Net income -9%

And to top it off, gross margins bumped up to 51% from 47% a year ago, courtesy of stronger auto PND pricing.

Another interesting thing I read from Reuters‘ summary is that Garmin “bundles its PNDs with its high-margin mapping services — a strategy that is not expected to boost profit till the end of 2012 due to its deferred revenue model. The impact from the deferred revenue will be a tailwind in 2012 and allow the company to beat profit expectations for 2012, Wedbush Securities analyst Scott Sutherland said.”

Cool stuff.

Geographic sales are always an important barometer of GRMN’s revenue stream. Here’s what they looked like YoY:

• N. America +6%
• Europe +16%
• Asia +8%

Looking ahead, the CEO sounded a bit cautious about auto PND sales, but optimistic towards their strategy of diversification and research:

“This is a great way to start the year; yet, we remain cautious regarding the PND industry as much of our strength was related to global market share gains. The revenue growth of our core business segments of outdoor, fitness, aviation and marine was 14%, highlighting the continued diversification in our business model. We continue to grow our research and development investment in these segments, as well as auto OEM, in order to capitalize on the numerous long-term growth initiatives in each of them.”

5 year (Y! Finance)

Garmin came in at #15 for May in the BeanScreen. A bit of a slide from recent months, but this latest report may well strengthen their overall fundies going into the summer. Stay tuned.

sources:  True Religion shares rise on strong 1Q earnings – AP

True Religion In Vogue After Starting Dividend, Share Buyback – Forbes

True Religion Apparel Announces First Quarter 2012 Financial Results And Initiates Cash Dividend – BusinessWire

TrueReligion

Garmin Reports First Quarter 2012 Results with Revenue and Pro Forma EPS Growth – BusinessWire

Garmin profit beats on fitness products sales – Reuters

Garmin Finds Route Higher; Shrs Rally On Strong Q1 – Forbes

Garmin

disclosure:  we currently own shares in TRLG and GRMN

In the table below, each stock’s WSB score is noted, along with its number of consecutive months on the list and % return (without dividends re-invested) during that time. Stocks checked off in the Buy Signal column are those we believe may be ripe for purchase.

This month we tweaked the category weightings a bit. Price Ratios now represent 15% of a stock’s WSB score, down from 18%, and Momentum (relative strength) was increased from 6% to 10%. We’re hoping this shift will improve the discounting mechanism towards value traps, since such stocks often show weak momentum as they get “cheap”.

As always, do your own due diligence cuz we ain’t pros! The BeanScreen is just an idea creator.

Follow the Consecutive Months Tracker in real-time here.

This month’s returns.

In: QCOR, MED, PCLN, QCOM              Out: TRLG, TEO, BVN, DECK

The 2nd Twenty (21-40)

The Farm System (41-100)

The BeanScreen is based on fundamentals. Each month hundreds of companies are screened and scored on a fundy health index ranging from 0-100. Over time an average score and rank is compiled for a select group of stocks. The higher the score, the stronger a company’s overall fundamentals. Here is the breakdown:

70-100 = very strong

60-69 = strong

40-59 = average

0-39 = weak

Below are the seven categories (with weighting) that contribute to a stock’s WSB score:

• Growth Rates – 25%
• Price Ratios – 15%
• Profit Margins – 15%
• Financial Condition – 15%
• Investment Returns – 15%
• Momentum – 10%
• Management Efficiency – 4%

Within each category are an assortment of parameters that are uploaded into the BeanScreen via Randy Hamerlink’s stock market functions add-in program for Excel. The data is then bench-marked and scored using our custom formula. A few other secondary parameters (1% weighting) are measured as well, such as Insider Ownership and Short Ratios.

In creating the Buy Signal, we zero in on what we believe are the most critical aspects of a stock’s overall health: Growth Rates, Price Ratios, Profit Margins and Momentum. Deriving a sub-score from these four categories, we arrive at a threshold level that may reveal a buying opportunity for the next few months and beyond.

Here’s a quick video demo:

  (Zoom in for better view)

The BeanScreen is not a perfect system. It cannot fully detect value traps (working on that!) or fraud. It is strictly an idea generator, a tool in our investing shed. Backward looking by nature, it only determines those companies that have appeared to exhibit healthy fundamentals over the last few months to two years. Our goal is to sift out these stocks and then hunt for potential value plays.

$RES a bit cautious for 2012 as nat gas remains at decade lows, but turned in a decent Q1 – WSB

$CEO sales were up even as production was down in their 1st quarter. Spills ain’t good – WSB

$EZPW made a decent recovery after last week’s earnings miss. We added at $26 the next day.

$HITK got the hook-up on Lidocaine. The ointment had 12 month sales of $25 mil – Y! Finance

$NTES cranked out all time highs this week. Love the fundies. Check out the latest TA…good stuff.

$AAPL the Woz really digs the new $MSFT phone. Is it cooler than Android or iOS? – Y! Finance

$CF just won’t stop. Kissed all time highs as Q1 earnings on tap this coming week 5/4.

$TEO touted strong growth at their shareholder meeting. Yeah but it’s still Argentina – Y! Finance

$BKE always take the Y! Message Boards with a grain of salt, but props were given out here.

$GRMN Q1 earnings out on May 2. Would be nice to see YoY gains on top and bottom – Estimize

$LULU finally got the pullback we’ve been waiting for, but it didn’t last long.  Missed it.

$INTC scooped up some assets from $CRAY for a cool $140 mil. – Y! Finance

$DECK got our pants pulled down (holding from $74.50) after that disaster of a report – AP

$BVN the Peruvian gold digger reported flat sales and a decline in EPS in Q1 – Y! Finance

$CHL China’s mobile base surpasses 1 billion (CHL = 667 mil). Good news for $AAPL too – Forbes

$RGR the gunslinger unloads Q1 on Tuesday. Greatness expected – Estimize

$TRLG dishes up earnings as well on Tuesday. Greatness not really expected – Estimize

p.s. The May edition of the BeanScreen will be revealed in all its glory Monday night.

disclosure:  we currently own shares in RES, CEO, EZPW, HITK, NTES, AAPL, MSFT, BKE, GRMN, INTC, DECK, BVN, CHL and TRLG

You bring marshmallows?

RPC Inc. ($RES), an oilfield services company based out of Hot-lanta, GA, reported Q1 this morning that beat the Street on EPS (37c vs 34c), but came in a tad light on revs. The stock has been getting slammed in recent months, especially after the previous quarter’s big miss.

Not that they’re doing all that bad mind you (2011 was a great year), it’s the fear of uncertainty going forward that’s driving investors away. With natural gas prices drifting around 10 years lows, the drilling industry is shifting its priorities when it comes to energy exploration. Oil is king right now…natty isn’t. RPC still does very well with all the oil exploration going on, but they do even better when oil and natgas is being hotly pursued.

To the Q1 numbers (YoY):

• Revenue +32%
• Net income +23%
• EBITDA +24%
• SG&A +25%

RPC operates via two segments, Technical Services and Support Services. Technical revenues were up 32% and Support up 27% for the quarter. Also, more than $120 mil was plowed into new equipment and capex.

From the CEO:

“During the first quarter of 2012, RPC benefited from a larger fleet of revenue-producing equipment and high activity levels in the oil-directed domestic basins in which we operate…

From an industry perspective, the average domestic rig count during the first quarter was 1,990, a 16.0 percent increase compared to the same period in 2011…

The unconventional rig count, which is a more important indicator of the demand for RPC’s services, increased by 15.4 percent compared to the prior year, and during the first quarter of 2012 represented 69.8 percent of U.S. domestic drilling activity…

We remain cautious about near-term domestic drilling activity levels due to natural gas prices which are at a 10-year low. We will continue our allocation of resources to domestic basins which show the highest potential in an environment of continued high oil prices.”

1 year - Y! Finance

Sitting atop the BeanScreen throne this month, RPC has been a real stickler for us. We own a good chunk at a cost basis (split-adjusted) of about $12 per share. We’re down, but not out, and continue to believe that RPC’s fundamentals remain strong. This report shouldn’t change our stance once the new figures are screened out.

If and when natgas makes its comeback, RPC will stand to benefit greatly. In the meantime we’ll just bide our time…and collect that 3.5% divy yield.

sources: RPC profit beats estimates on higher oil drilling – Reuters

RPC, Inc. Reports First Quarter 2012 Financial Results – Y! Finance

RPC drills into higher revenue, profit in first quarter – BizJournals

RPC.net

disclosure:  we currently own shares in RES

1 year (Y! Finance)

Ranked #2 in the BeanScreen, China’s big oiler CNOOC ($CEO) released its unaudited Q1 results this morning.

Some of the details from Reuters:

“CNOOC Ltd reported a 6.3 percent drop in crude oil and gas output in the first quarter after a spill shut its biggest oilfield last year, as the top Chinese offshore oil producer struggles to deliver production growth for this year.

Production totalled 79.8 million barrels of oil equivalent (boe) in the first three months, compared with 85.2 million boe a year earlier….”

 …

“CNOOC Chief Executive Officer Yang Hua told Reuters that the company, which made five new discoveries and five successful appraisal wells offshore China in the first quarter, was confident of hitting its production target set for this year.

The company aims to produce 330 million to 340 million boe this year — little changed from 331.8 million boe in 2011… It targets compound annual output growth of 6 to 10 percent in the five years through 2015, partly by focusing on unconventional resources including oil sands and shale gas.”

CEO also ramped up capex by more than 58% YoY, so they’re obviously getting serious about cranking up production. That’s a good thing because increased volume will be needed to keep up with the rising costs of “its exposure to deepwater and unconventional assets.”

source:  CNOOC Q1 output falls 6.3 pct after oil spills – Reuters

disclosure:  we currently own shares in CEO

Dear EZPW, please don't ever miss another earnings estimate. That's all.

$RES judgment day next week as Q1 will be released before the bell on 4/25. Do or die time.

$CEO may have hit paydirt after two recent oilfield discoveries were appraised – Y! Finance

$EZPW gotten taken behind the proverbial woodshed after missing Q2 estimates, but… – WSB

$NTES mystery and suspense as rumors swirl of a new role-playing action game – TechInAsia

$AAPL it’s the beginning of the end! The Mayans were right. At least we sold some the other day.

$CF itching to get long this fert, but may wait to see how Q1 earnings pan out on 5/3

$TNH took a tumble this week but recovered nicely at the end. Stalking this fert closely as well…

$TEO cruisin’ near 52wk lows. Fundies look good, but it’s Venezuelan…I mean Argentinian.

$BKE a very ho-hum kinda week. We’ll take it considering.

$GRMN opened up shop in a few new strategic locations in a bid for some OEM work – WSB

$LULU what @LDrogen said about this list of fast growing & dying industries -> The Big Picture

$INTC beat estimates, but earnings fell 13% during Q1. Fundies still super awesome. Long all day.

$DECK reports Q1 next Thur 4/26. Anyone have a link to the latest sheepskin prices?

$SYNT spanks the Street by 23 cents en route to 52wk highs. Why don’t we own this? – Reuters

$CHL Big Red hit 52wk highs as they launched 4G services and reported a solid Q1 – IBD

$RGR just won’t stop. Amazing.

$TRLG about as sideways as it gets since last earnings. Seems everyone’s on hold til Q1 on 5/1

disclosure: we currently own RES, CEO, EZPW, NTES, AAPL, BKE, GRMN, INTC, DECK, CHL and TRLG

It wasn’t fancy enough for the Street (or us to be honest), but EZCorp ($EZPW) still managed to turn in a workman-like effort for Q2. EPS came in at 73 cents, 3c below consensus and 4c shy of our Estimize. If not for a 3 cent charge related to acquisition costs, they might have met estimates. Who knows.

In a similar strategy to First Cash ($FCFS), who reported yesterday, EZPW is making a hard push into Mexico. They closed out a deal with Crediamigo, a payroll deduction loaner, for a 60% stake. They also opened 13 new Empeno Facil stores last quarter, bringing the total to 205.

EZPW’s other deal-closer was across the pond with a 72% stake in Cash Genie, a provider of online loans in the U.K. Here at home (and Canada) they opened 8 new shops and acquired 15.

Here’s how last quarter shook out YoY:

• Total revs +20%
• Net income +17%
• Operating income +24%
• US & Canada revs +14% (comps +4%)
• Latin America revs +110% (comps +9%)

For full year 2012, EZPW guided down a tad (about 6%) from previous EPS guidance, and now expects to bring home about $2.85-2.95 per share. Apparently customers have run out of gold to pawn, and are now cashing in more lower margin “general” merchandise. Now would probably be a good time to adopt that “fine wine for cash” model that others in the industry have started. High margins there I bet.

The CEO had this to say:

“The consumer demand for our products in the U.S., Mexico, and Canada, as well as the rest of the world is expanding. The combination of our large and rapidly growing U.S. businesses, accelerated growth in Mexico through Empeno Facil and Crediamigo, our U.K. investments in Cash Genie and Albemarle & Bond, and our Cash Converters investments in Australia, the U.K. and Canada position us well for rapid, diversified growth around the world.”

To us it looks like EZPW is very serious about conquering the pawn/payday loan world through aggressive expansion via acquisitions and partnerships. The floodgates were opened a few years ago as the big banks of the world heaved and shuddered, allowing the “new banks” to step in nicely to carve out their niche in this new economy. We think they’re here to stay…and grow.

 

2 year (Y! Finance)

Ranked #3 in the BeanScreen this month, EZPW is our single largest holding. We’ve owned them for two and a half years now at a cost basis of about $22 per share, and see no reason to make any changes after this report.

We’re not gonna sugarcoat this latest Q, it was a bit of a disappointment…a miss is a miss. The market discounts the future and expected better results. Past performance and success doesn’t always guarantee future greatness, but with EZPW we believe the underlying fundamentals will remain strong after these new figures are digested in the BeanScreen.

Next week Cash America ($CSH) closes out our New Banks’ earnings season. Here’s our updated Estimize.

Good luck out there.

sources:  EZCORP Reports 17% Increase In Net Income – Yahoo! Finance

EZCORP 2nd-qtr profit misses, cuts FY earnings outlook – Reuters

InPlay: EZCORP misses by $0.03, beats on revs; guides FY12 EPS below consensus - Breifing.com

EZCorp

disclosure:  we currently own shares in EZPW, CSH and FCFS

2 year (Y! Finance)

First Cash Financial ($FCFS) reported Q1 this morning that beat the Street by 3 cents. Profit was down year over year, but that was due in large part to a 20 cent lift from discontinued operations last year.

The main thing that stood out this quarter was FCFS’s hard charge into the Mexican market, where 49 of the 54 new stores were opened. For 2012, they expect to open a total of 110-120 new shops, with about 100 expected to be south of the border.

Here’s some digits from this morning’s Q:

• Revenue +12%
• Net income -23%
• Diluted EPS from cont. ops +16%
• Comps +5%
• Pawn fees +26% (Mexico +33%)

They also guided full year “earnings of $2.70 to $2.75 per share, up from a previous guidance of $2.65 to $2.70 per share.”

Coming in at #36 in the BeanScreen this month, we initiated a position in FCFS last November at $35, and sold half at $42 a few months later as valuations got a bit rich compared to their peers.

…And speaking of peers, EZCorp ($EZPW) reports mañana and Cash America ($CSH) next Thursday. Stay tuned.

sources:  First Cash Financial 1Q profit falls, revenue up – AP

First Cash profit beats, ups FY forecast – Reuters

First Cash Reports Record First Quarter Earnings Per Share of $0.58; Completes Share Repurchase Plan and Raises Fiscal 2012 EPS Guidance – Y! Finance

First Cash Financial

disclosure:  we currently own shares in FCFS, CSH and EZPW